Article 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery
thereof. (n)
Article 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any
of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee. (n)
KUENZLE V. MACKE
Doctrine: Ownership of personal property cannot be transferred to the prejudice of third persons except by delivery of the
property itself; and that a sale without delivery gives the would-be purchaser no rights in those property except those of a
creditor. A bill of sale of personal property, executed in a private document and unrecorded, which property described there was
not delivered and remained in possession of the vendor, could have no effect against a person dealing with the property upon
the faith of appearances.
Short version: A Sheriff levied on a property based on a case of Chandler v. Krippendorf. Chandler won. Kuenzle says the property
is his while Chandler, who was the one who bought the property from the auction, insists that the property is Krippendorf’s.
Apparently, Krippendorf sold the property to Kuenzle but never delivered it. SC says Chandler has a good title to the lounge
because a bill of sale of personal property, executed in a private document and unrecorded, which property described there was
not delivered and remained in possession of the vendor, could have no effect against a person dealing with the property upon
the faith of appearances.
(Jan 1907) Kuenzle says that it was the owner of the Oregon Saloon (bar, furniture and fixtures worth P1 000) in Cavite and that
the Sheriff levied on it. o Sheriff levied based on a judgment won by Macke & Chandler (heretofore referred to as “Chandler”)
against Stanley & Krippendorf (heretofore referred to as Krippendorf).
Kuenzle then notified the Sheriff that it was the owner of the Oregon property but Sheriff ignored and proceeded to sell the
property. o Chandler was the purchaser.
In this case, defendant Chandler says: o Property was not Kuenzle’s at the time of the levy and sale.
o The property was owned by Krippendorf who was in possession of the property at the time of the levy.
o That in Jan 1907, Krippendorf was indebted to Kuenzle. And so, Krippendorf attempted to sell the property to
Kuenzle.
o It was in an instrument in writing but it was never recorded (it was a private document) o That the property was not
delivered to Kuenzle so the possession of the property remained with Krippendorf.
o Then, Krippendorf and Chandler conducted the sale after the execution of the transaction between Krippendorf and
Kuenzle (terms and conditions exactly the same), without reference to Kuenzle
Issue: What is the effect of the instrument of sale with regards to transferring property from Krippendorf to Kuenzle?
Held: Chandler was able to obtain a good title (this was the Court’s answer. So I guess the transaction between Krippendor &
Kuenzle was incomplete
Ratio:
SC cites the case of Fidelity & Deposit Company v. Wilson which laid down a doctrine that ownership of personal property
cannot be transferred to the prejudice of third persons except by delivery of the property itself; and that a sale without delivery
gives the would-be purchaser no rights in those property except those of a creditor
The bill of sale in this case was a bill of sale of personal property. A bill of sale of personal property, executed in a private
document and unrecorded, which property described there was not delivered and remained in possession of the vendor, could
have no effect against a person dealing with the property upon the faith of appearances.
Kuenzle cites a case (Kuenzle v. AS Watson) which the SC did not find to be applicable. o That was a case of the sale of property
upon the condition that the title should remain in the vendor until the purchase price should be fully paid o And that in case of
non-payment of the debt or any instalment, the vendor would have a rights to take possession of the property and deal with it
as provided for in the contract
That case was inapplicable because: o In that case, the Court held that such a contract for the conditional sale of goods was
valid also as to third persons, provided possession of the property was taken by the vendor before the rights of third persons
intervened against the same
In this case, the bill of sale was not a conditional sale of property so the principles in Kuenzle v. AS Watson are inapplicable.
Chandler purchased the property at an execution sale. And so , Chandler obtained a good title to the property as against Kuenzle.
Judgment affirmed.
Article 1502. When goods are delivered to the buyer "on sale or return" to give the buyer an option to return the
goods instead of paying the price, the ownership passes to the buyer on delivery, but he may revest the ownership in
the seller by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within
a reasonable time. (n)
When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the ownership
therein passes to the buyer:
(1) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(2) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice
of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if
no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of
fact. (n)
Article 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully
paid the price. (n)
FACTS :
Defendant Myers Building Co., Inc., owner of three parcels of land in the City of Manila, together with the improvements
thereon, sold it to Maritime Building Co., Inc., for 1million through a contract of "Deed of Conditional Sale". P50, 000.00
of this price was paid upon the execution of the said contract and the parties agreed that the balance of P950, 000.00
was to be paid in monthly installments at the rate of P10,000.00 with interest of 5% per annum until the same was fully
paid.
They agreed that in case of failure on the part of the vendee to pay any of the installments due and payable, the contract
shall be annulled at the option of the vendor and all payments already made by vendee shall be forfeited and the vendor
shall have right to re-enter the property and take possession thereof.
Later the installment was decreased to P5,000.00 per month and the interest was raised to 5-1/2% per annum. The
monthly installments were regularly paid until February . It failed to pay the monthly installment corresponding to the
month of March 1961. the Vice-President, of the Maritime Building Co., Inc., wrote a letter to the President of Myers, ,
requesting for a moratorium (suspension) on the monthly payment of the installments until the end of the year , because
the company was encountering difficulties in connection with the operation of the warehouse business. However, it
answered that the monthly payments due were not payable to the Myers Estate but to the Myers Building Co., Inc., and
that the Board of Directors of the Myers Co., Inc. refused to grant the request for moratorium for suspension of
payments.
Maritime Building Co., Inc. failed to pay the monthly installments the Myers Building Co., Inc. made a demand for the
payment of the installments that had become due and payable.the Myers Building Co., Inc. wrote the Maritime Building
Co., Inc. another letter advising it of the cancellation of the Deed of Conditional Sale entered into between them and
demanding the return of the possession of the properties and holding the Maritime Building Co., Inc. liable for use and
occupation of the said properties at P10,000.00 monthly.
Myers Building Co., Inc. also demanded Luzon Brokerage Co., Inc. to whom the Maritime Building Co., Inc. leased the
properties, the payment of monthly rentals of P10,000.00 and the surrender of the same to it. Thus , it prompted file
interpleader against the Maritime Building Co., Inc.
Myers Building Co., Inc. in its answer filed a cross-claim against the Maritime Building Co., Inc. praying for the
confirmation of its right to cancel the said contract. However, the contract between the Maritime Building Co., Inc. and
the Luzon Brokerage Co., Inc. was extended by mutual agreement for a period of four (4) more years.
Maritime Building Co., Inc. contends (1) that the Myers Building Co., Inc. cannot cancel the contract entered into by
them for the conditional sale of the properties in question extrajudicially and (2) that it had not failed to pay the monthly
installments due under the contract and, therefore, is not guilty of having violated the same.
According to Maritime, the suspension. of the payment of installments due to Myers Building arose from an award of
backwages made by the Court of Industrial Relations in favor of members of Luzon Labor Union who served the Fil-
American forces in Bataan in early 1942 at the instance of the employer Luzon Brokerage Co. and for which F. H.
Myers, former majority stockholder of the Luzon Brokerage Co., had allegedly promised to indemnify E. M. Schedler
(who controlled Maritime) when the latter purchased Myers' stock in the Brokerage Company. Schedler contended that
he was being sued for the backpay award of some P325,000, when it was a liability of Myers, or of the latter's estate
upon his death.
TRIALCOURT’S DECISION
The trial court found the position of Schedler indefensible, and that Maritime, by its failure to pay, committed a breach
of the sale contract; that Myers Company, from and after the breach, became entitled to terminate the contract, to forfeit
the installments paid, as well as to repossess, and collect the rentals of, the building from its lessee, Luzon Brokerage
Co., in view of the terms of the conditional contract of sale.
Maritime invokes Article 1592 of the Civil Code of the Philippines as entitle it to pay despite its default.
ISSUE :
W/N MARITIME may pay even after the expiration of the period as stipulated under Art 1592.
HELD:
NO. Appellant overlooks that its contract with appellee Myers is not the ordinary sale envisaged by Article 1592,
transferring ownership simultaneously with the delivery of the real property sold, but one in which the vendor retained
ownership of the immovable object of the sale, merely undertaking to convey it provided the buyer strictly complied with
the terms of the contract. In suing to recover possession of the building from Maritime, appellee Myers is not after the
resolution or setting aside of the contract and the restoration of the parties to the status quo ante, as contemplated by
Article 1592, but precisely enforcing the provisions of the agreement that it is no longer obligated to part with the
ownership or possession of the property because Maritime failed to comply with the specified condition precedent,
which is to pay the installments as they fell due.
The distinction between contracts of sale and contract to sell with reserved title has been recognized by this Court in
repeated decisions upholding the power of promisors under contracts to sell in case of failure of the other party to
complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or
installments already received, where such rights are expressly provided for, as in the case at bar.
ART. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the
price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after
the expiration of the period, as long as no demand for rescission of the contract has been made upon him either
judicially or by a notarial act. After the demand, the court may not grant him a new term.
b. Implied Reservation (Art. 1503)
Article 1503. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve
the right of possession or ownership in the goods until certain conditions have been fulfilled. The right of possession or
ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee
for the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order
of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except for the form of the bill
of lading, the ownership would have passed to the buyer on shipment of the goods, the seller's property in the goods
shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or of his agent, but
possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the possession
of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading together
to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if
he does not honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added right thereby.
If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is
indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value, the bill
of lading, or goods from the buyer will obtain the ownership in the goods, although the bill of exchange has not been
honored, provided that such purchaser has received delivery of the bill of lading indorsed by the consignee named
therein, or of the goods, without notice of the facts making the transfer wrongful. (n)
Kinds of Delivery
1. Real delivery
Article 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the
vendee. (1462a)
Bean v. Cadwallader
FACTS: Where the goods were ready for delivery at the time and place agreed upon, the mere fact that the buyer, by
reason of the improper equipment of the vessel, was unable to take the goods aboard the vessel, cannot relieve the
latter for responsibility under the contract.
George Case and BW Cadwallader had a contract for the sale of certain types of logs. Case bound himself to deliver
said pieces of wood to the BW Cadwallader alongside the latter's ship at Basilan. Case was able to deliver the logs on
time in the port of Basilan. However, despite repeated attempts to load the logs, they were not loaded. Cadwallader
wants the contract rescinded.
HELD: Case had already complied with his obligation to deliver the logs since he had already delivered the logs
alongside the vessel. Actual manual delivery of an article sold is not essential to the passing of the title thereto (art
1450, Civil Code) unless made so by the terms of the contract or by an understanding of the parties. The parties to the
contract may agree when and on what conditions the property in the subject of the contract was passed to the
prospective owner.
Ponente: Fisher, J
QUICK FACTS: Petitioners delivered to Chua Teng Chong a shipment of sugar. Chua Teng Chong did not pay petitioners and the
sugar was seized by his creditor to settle a debt. The court held that delivery resulted in conveyance of the ownership over the
sugar despite the fact that there was no full payment.
FACTS:
On March, 1914, Chua Teng Chong gave a promissory note to International Banking Corporation in exchange for Php 20k. 5000
piculs1 of sugar, located in a warehouse in Calle Toneleros, was put up as security for the note.
It seems that at the end of March, Ocejo, Perez and Co. entered into contract with Chua Teng Chong for the sale of some sugar.
The sugar was brought to Manila in the month of April, and 5,000 piculs were delivered by to Chua Teng Chong whereupon it
was stored in the a warehouse at No. 119, Muelle de la Industria. The next day, petitioners attempted to collect the purchase
price of the sugar, but the buyer refused to make payment. In the written contract between them, nothing was said concerning
the time and place for payment.
When the promissory note executed had fallen due and was unpaid, the bank made the effort to exercise active ownership over
the sugar (Coincidentally, on the same day it was delivered to Chua Teng Chong by March, Ocejo, Perez and Co), it discovered
that the amount of sugar in his warehouse was less than the 5,000 piculs mentioned in the contract. Chua Teng Chong said that
the rest of the sugar was in a warehouse at No. 119, Muelle de la Industria. The bank’s representatives then went to this
warehouse and upon arrival there found some 3,200 piculs which they immediately seized, closing the warehouse with the bank's
padlocks.
Ocejo demand the bank to return the sugar, which the latter refused. Petitioners filed a complaint, with the bank as defendant,
alleging that the bank was unlawfully holding the property of the plaintiff firm. By agreement of the parties, the sugar was sold
and the proceeds of the sale deposited in the bank, subject to the order of the court upon the final disposition.
Chua Seco, the assignee of now insolvent Chua Teng Chong, asserts a preferential right proceeds of its sale, upon the ground that
the delivery of the sugar by plaintiff, by virtue of which it passed into the possession and control of Chua Teng Chong, indicates
that the sugar is the property of the insolvent estate represented by him.
The lower court rendered judgment in favor of Ocejo, Perez & Co and from this decision appeals have been taken by the bank
and by the intervener.
ISSUES/DECISION:
(a) Did title to the sugar pass to the buyer upon its delivery to him? Yes
(b) Assuming to pay that the title passed to the buyer, did his failure to pay the purchase price authorize the seller to rescind
the sale? Yes
(c) Was the commencement of a replevin suit by the seller equivalent to the rescission of the sale? No
Seller argues: Despite the fact that no term was stipulated within which the payment should be made, he was entitled to demand
payment at any time after delivery, and further that until such payment was in fact made, title to the sugar did not pass to the
buyer.
HELD
a) The obligation of the seller to make delivery of the thing sold was not subject to the condition that
the buyer was to pay the price before delivery. The sugar was delivered to the buyer on April 16, 1914. The seller
delivered it into the buyer's warehouse, leaving it entirely subject to his control. Article 1462 of the Civil Code provides that the
thing sold is deemed to be delivered "when it passes into the possession and control of the buyer.”
According to Manresa, tradition is a true mode of acquiring ownership "which effects the passage of title and the birth of the
right in rem. Therefore, the delivery of the thing . . . signifies that title has passed from the seller to the buyer."
The Transaction is not a like a cash sale in which delivery and payment are to be made simultaneously. When no term for payment
is stipulated, the seller is not bound to deliver the thing sold until the buyer has paid the price; But if delivery is consummated,
he in fact grants a term of credit to the buyer, however short and indeterminate it may be, and waives his right to insist upon
payment in advance or simultaneously with delivery. But he does become entitled to payment upon demand made upon the
buyer.
In De la Rama vs. Sanchez: “The fact that the price of the property has not yet been paid in full is not, nor can it be, an obstacle
to the acquisition of the ownership thereof by the plaintiff, because as such a condition was not stipulated in the contract, the
latter immediately produced its natural effects in law, the principal and most important of which being the conveyance of the
ownership by means of the delivery of the thing old to the purchaser, without prejudice, of the course, to the right of the vendor
to claim payment of any sum still due.”
In Gonzalez vs. Rojas: . . . ownership of things is not transferred by mere contract but by delivery. Contracts only constitute titles
or rights to the transfer or acquisition of ownership, while delivery or tradition is the method of accomplishing the same, the title
and the method of acquiring it being different in our law."
Therefore, the effect of the delivery was to transmit the title of the sugar to the buyer.
b-c) Article 1124 of the Civil Code states that reciprocal obligations are rescindable when one of the parties bound should fail to
perform that which is incumbent upon him. In the contract of the sale the obligation to pay the price is correlative to the
obligation to deliver the thing sold. Nonperformance by one of the parties authorizes the other to exercise the right to demand
the performance of the obligation or its rescission. But the right to rescind the sale for nonperformance on the part of the buyer
is not absolute; the law subordinates it to the rights of third persons in good faith. The bank argues this principle, alleging that
the sugar was pledged to it, after its delivery to the buyer.
However, the sugar pledged is not the same as that here in dispute. The pledge was for the sugar in the Calle Toneleros
warehouse, not the one in Muelle de la Industria. The sugar in question could not be possibly have been the subject matter
of the contract of pledge which was formed in March as it was not the property of the defendant at the time.
Even if an attempt was made to pledge the sugar when it was delivered, it would be void as against third persons since it was not
recorded in a public instrument. Therefore, the pledge asserted by the International Bank is inefficacious.
The mere will of the plaintiff will not produce the rescission of the sale. Although the right to rescind a sale, is established by
article 1506 and 1124 and such right so conferred is not an absolute one. The same article provides that "the court shall decree
the rescission demanded, unless there are causes which justify him in allowing a term."
Facts:
Hua bought 2 condominium units from Cebu Winland Development Corporation. The area per condominium unit as
indicated in the price list is 155 square meters and the price per square meter is P22,378.95.
On October 10, 1996, possession of the subject properties was turned over to Hua.
After the purchase price was fully paid on January 31, 1997, Cebu Winland sent to Hua Deeds of Absolute Sale for the
two condominium units for signature. Upon examination of the deed of absolute sale, Hua was distressed to find that
the stated floor area is only 127 square meters contrary to the area indicated in the price list which was 155 square
meters.
Hua caused a verification survey of the said condominium units and discovered that the actual area is only 110 square
meters per unit. Hua demanded from Cebu Winland to refund the amount of P2,014,105.50 representing excess
payments for the difference in the area, computed as follows: 155 sq.m.-110 = 45 x 2 units = 90 sq.m. x P22,378.95 =
P2,014,105.50.
Cebu Winland refused to refund the said amount. Consequently, Hua filed a Complaint on August 7, 1998 in the
Regional Office of the Housing and Land Use Regulatory Board (HLURB) in Cebu City. The Arbiter ruled that Hua's
action had already prescribed pursuant to Article 1543, in relation to Articles 1539 and 1542, of the Civil Code. Hua
appealed.
Cebu Winland argues that it delivered possession of the subject properties to Hua on October 10, 1996, hence, Hua's
action filed on August 7, 1998 has already prescribed.
Hua, on the one hand, contends that his action has not prescribed because the prescriptive period has not begun to
run as the same must be reckoned from the execution of the deeds of sale which has not yet been done.
Issues:
2. Whether the sale in the case is one made with a statement of its area or at the rate of a certain price for a unit of
measure and not for a lump sum.
Held:
The pertinent provisions of the Civil Code on the obligation of the vendor to deliver the object of the sale provide:
Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object
of the sale.
Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of
the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee.
Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the
vendee.
Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery
of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be
inferred.
Article 1497 above contemplates what is known as real or actual delivery, when the thing sold is placed in the control
and possession of the vendee. Article 1498, on the one hand, refers to symbolic delivery by the execution of a public
instrument. It should be noted, however, that Article 1498 does not say that the execution of the deed provides a
conclusive presumption of the delivery of possession. It confines itself to providing that the execution thereof is
equivalent to delivery, which means that the presumption therein can be rebutted by means of clear and convincing
evidence. Thus, the presumptive delivery by the execution of a public instrument can be negated by the failure of the
vendee to take actual possession of the land sold.
Delivery is an act by which one party parts with the title to and the possession of the property, and the other acquires
the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery
of property or title; it means transfer of possession.
“Delivery” as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership.
This is the rationale behind the jurisprudential doctrine that presumptive delivery via execution of a public instrument is
negated by the reality that the vendee actually failed to obtain material possession of the land subject of the sale. In
the same vein, if the vendee is placed in actual possession of the property, but by agreement of the parties ownership
of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of
the property subject of the sale is not the “delivery” contemplated in the Law on Sales or as used in Article 1543 of the
Civil Code.
In the case at bar, it appears that Cebu Windland was already placed in possession of the subject properties. However,
it is crystal clear that the deeds of absolute sale were still to be executed by the parties upon payment of the last
installment. This fact shows that ownership of the said properties was withheld by petitioner. Following case law, it is
evident that the parties did not intend to immediately transfer ownership of the subject properties until full payment and
the execution of the deeds of absolute sale. Consequently, there is no “delivery” to speak of in this case since what
was transferred was possession only and not ownership of the subject properties.
The transfer of possession of the subject properties on October 10, 1996 to Hua cannot be considered as “delivery”
within the purview of Article 1543 of the Civil Code. It follows that since there has been no transfer of ownership of the
subject properties since the deeds of absolute sale have not yet been executed by the parties, the action filed by Hua
has not prescribed.
2. Article 1539 provides that “If the sale of real estate should be made with a statement of its area, at the rate of a
certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee…all that may have
been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction
of the price and the rescission of the contract….” Article 1542, on the one hand, provides that “In the sale of real estate,
made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase
or decrease of the price, although there be a greater or lesser area or number than that stated in the contract."
Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price contract, the
statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area
actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver
all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not
possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the
amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.
In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree
on a stated purchase price for an immovable the area of which may be declared based on an estimate or where both
the area and boundaries are stated.
In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale
of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be
no increase or decrease of the price although there be a greater or lesser area or number than that stated in the
contract. However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description
"more or less" with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of
"more or less" or similar words in designating quantity covers only a reasonable excess or deficiency.
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the
immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should
prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its
description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of
land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement
with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of
land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with
sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of
the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the
determinate object.
In the case at bar, it is undisputed by the parties that the purchase price of the subject properties was computed based
on the price list prepared by petitioner, or P22,378.95 per square meter. Clearly, the parties agreed on a sale at a rate
of a certain price per unit of measure and not one for a lump sum. Hence, it is Article 1539 and not Article 1542 which
is the applicable law. Accordingly, respondent is entitled to the relief afforded to him under Article 1539, that is, either
a proportional reduction of the price or the rescission of the contract, at his option. Respondent chose the former
remedy since he prayed in his Complaint for the refund of the amount of P2,014,105.50 representing the proportional
reduction of the price paid to petitioner.
2. Constructive Delivery
a. Symbolic Delivery
Article 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly
be inferred.
With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository
where it is stored or kept. (1463a)
Aviles v. Arcega
Facts:
Plaintiff (herein petitioner) bring and action to recover title to a house of mixed materials erected on a leasehold land of
the Nagtahan estate. While plaintiff claim owership of said house, the defendants (herein respondents) assert title in
themselves. Ith may raise the question, which of the two sales was the title to the house in dispute transferred.
The house in question originally belongs to Sps. Vinancio and Vicenta Alcantara (owner). On October 1917, the owner sold
the said house in a public document to the plaintiff, with a stipulation that “during 4 months from sale, the owners would
continue in possession of the house.” It should be noted that plaintiff never had possession of the house even after the
expiration of the 4 months following the sale.
On March 13, 1918, the same owners, who continued having possession of the house, in a public document sold the same
house to the defendants (herein respondents), who then and there took possession of said house. Thus the case for recovery
of title was filed.
At the trial of the case, the parties entered into the following stipulation of facts:
1. That the house in dispute in this case was on October 10, 1917, sold by the owners to the plaintiffs, and acknowledge on
the 8th of November 1971, before the notary public, it having been stipulated that during 4 months from the 10th of October,
1917, the vendors would continue in possession of the house the expenses for repair, land and other tax to be for their
account, as well as the payment of the rent for the lot on which it is erected.
2. That in a document dated March 13, 1918, and acknowledged on the following day before the notary public, the same
property was sold by the same owners to defendants, who took possession of the property, as stated in the complaint, the
plaintiff never taken possession thereof.
The trial court rendered judgment declaring defendants to be the owners of the house. Plaintiffs appealed.
Issue:
Whether or not the trial court was correct in declaring the second sale as the valid sale.
Ruling:
Yes. The court entertains no doubt, either under the facts or under the law of hte case, as to the right of the defendants to
the house in question, with absolute exclusion of the plaintiffs.
The Court has already seen that the plaintiff never took possession of the house, as stipulated by the parties, while the
second purchasers did. Under the Civil Code (old), the conclusion is inevitable that the title to the house was transmitted
not to the plaintiff but to the defendants.
The Court is of the opinion that the plaintiff cannot invoke symbolic delivery by the execution of the public document of
sale, inasmuch as there was not, nor could there have been, such delivery, the same being prevented by the express
stipulation contained in the deed of sale, to the effect that the vendors did not part with the possession of the house but
would continue therein for 4 months. Article 1462 (now 1498 under the new code) of the Civil code says:
If the sale should be made by means of a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the subject-matter of the contract unless the contrary appears or may be clearly
inferred from such instrument.
At the time therefore of the execution of the deed in favor of the plaintiff who is the first purchaser, there was no symbolic
delivery because there was an express stipulation to the contrary. It cannot be said that after the lapse of the 4 months
following, during which the vendors were to continue in possession of the house, according to the stipulation, any symbolic
delivery subsisted. Nothing can subsist that did not exist before. It cannot be said the symbolic delivery spontaneously
took after the lapse of the 4months stipulated, for there is no law providing that it should take place after the execution of
the document where there is a stipulation to the contrary. The law does not say that such symbolic delivery is suspended
when at the execution of the document a stipulation to the contrary is made. The law simply says that no symbolic tradition
can take place, when there is a stipulation to the contrary.
As we understand the law, there is symbolic delivery when the sale is made in a public document, and nothing appears
therein to the contrary either expressly or impliedly; and no such symbolic delivery can be held to take palce when, as in
the instant case, there is in the document a stipulation to the contrary.
This kind of tradition, however, is as to its efficaciousness, subject to the terms of the document, fo r if it appears therein,
or can be inferred therefrom, that it was not the intention of the parties to make delivery, no tradition can be deem end to
have taken place. Such would be the case, for instance, where a certain date is fixed when the purchase should take
possession of the thing, or where in the case of last installment is made, the tile to the property should not be deemed to
have been transmitted, or where the vendor reserves the right to use and enjoy the property until the gathering of the
pending crops.
Neither can it be said that the house must be presumed to have been delivered to the first purchaser after the lapse of the
four month aforesaid, for such a presumption is overthrown by the fact stipulated by the parties that this first purchaser
never took possession of the house.
Facts:
On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the reports of the Committee created to
survey suitable lots for relocating squatters in Manila and suburbs, approved in principle the acquisition by the People’s Homesite
and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan and of another area either in
Las Piñas or Parañaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. On June 10, 1960, the Board of
Directors of the PHHC passed Resolution No. 700 (Annex “C”) authorizing the purchase of the unoccupied portion of the Sapang
Palay Estate at P0.45 per square meter “subject to the following conditions precedent:
3. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and
development of this property from the proposed P4.5 million bond issue to be absorbed by the GSIS.
4. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3, 1959.
On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the amount of
P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a
price not to exceed P0.45 per sq. meter.
On December 29,1960, Petitioner Philippine Suburban Development Corporation, as owner of the unoccupied portion of the
Sapang Palay Estate and the People’s Homesite and Housing Corporation, entered into a contract embodied in a public instrument
entitled “Deed of Absolute Sale” whereby the former conveyed unto the latter the two parcels of land abovementioned. This was
not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC could
not at once advance the money needed for registration expenses.
In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval in conformity with Executive
Order No. 290, expressed objections thereto and requested a re-examination of the contract, in view of the fact that from 1948 to
December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly
increased amount of P4,898,110.00.
It appears that as early as the first week of June, 1960, prior to the signing of the deed by the parties, the PHHC acquired possession
of the property, with the consent of petitioner, to enable the said PHHC to proceed immediately with the construction of roads in
the new settlement and to resettle the squatters and flood victims in Manila who were rendered homeless by the floods or ejected
from the lots which they were then occupying.
On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30,099.79 from the
purchase price to be paid by it to the Philippine Suburban Development Corporation. Said amount represented the realty tax due
on the property involved for the calendar year 1961. Petitioner, through the PHHC, paid under protest the abovementioned amount
to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador
Aytona to order a refund of the amount so paid. Upon recommendation of the Provincial Treasurer of Bulacan, said request was
denied by the Secretary of Finance in a letter-decision dated August 22, 1961.
**Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on
December 29, 1960. It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax
in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on
December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the
transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under
no obligation to pay the real property tax for the year 1961.
**Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply
because of the requirement in the contract that the sale shall first be approved by the Auditor General, pursuant to the Executive
Order.
ISSUE: WON there was already a valid transfer of ownership between the parties.
HELD:
Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in
question, the prior approval by the Auditor General envisioned by Administrative Order would therefore, not be necessary.
Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive
(constructive tradition). 2 When the sale of real property is made in a public instrument, the execution thereof is equivalent to the
delivery of the thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. 3
In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument, unless from
the express terms of the instrument, or by clear inference therefrom, this was not the intention of the parties. Such would be the
case, for instance, when a certain date is fixed for the purchaser to take possession of the property subject of the conveyance, or
where, in case of sale by installments, it is stipulated that until the last installment is made, the title to the property should remain
with the vendor, or when the vendor reserves the right to use and enjoy the properties until the gathering of the pending crops, or
where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have
been made.
In the case at bar, there is no question that the vendor had actually placed the vendee in possession and control over the thing sold,
even before the date of the sale. The condition that petitioner should first register the deed of sale and secure a new title in the name
of the vendee before the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In the
absence of an express stipulation to the contrary, the payment of the purchase price of the good is not a condition, precedent to the
transfer of title to the buyer, but title passes by the delivery of the goods.
WHEREFORE, the appealed decision is hereby reversed, and the real property tax paid under protest to the Provincial Treasurer of
Bulacan by petitioner Philippine Suburban Development Corporation, in the amount of P30,460,90, is hereby ordered refunded.
Without any pronouncement as to costs.
Sarmiento v. Lesaca
FACTS:
Cruz was the owner of a parcel of land. Adjacent to this lot is one wherein Sarmiento had a house built on. On trying
to cause the relocation of her lot, Cruz found out that Sarmiento was encroaching on her property. When Cruz talked
to Sarmiento about constructing a new fence, which will cover her true property, the latter vehemently refused to do
so and threatened Cruz with legal action. For fear of being sued in court, she sought judicial relief. The trial court
decided in favor of Cruz. Sarmiento tried to assail this decision by saying that the issue was on ownership of the
portion of land and thus, the action should have been an accion reivindicatoria and not forcible entry.
HELD:
A careful reading of the facts averred in said complaint filed by Cruz reveals that the action is neither of forcible
entry nor of unlawful detainer but essentially involves a boundary dispute, which must be resolved in an accion
reivindicatoria on the issue of ownership over the portion of a lot.
Cruz cannot belatedly claim that petitioner’s possession of the controverted portion was by mere tolerance. The
complaint didn’t characterize Sarmiento’s alleged entry on the land—whether legal or illegal. The complaint
admitted also of the fact that the fence had already preexisted on the lot when she acquired the same.
This was definitely not a situation obtained in and gave rise to an ejectment suit for two reasons. First,
forcible entry into the land is an open challenge to the right of the lawful possessor, the violation of which right
authorizes the speedy redress in the inferior court provided for in the Rules. Second, if a forcible entry action in the
court is allowed after the lapse of a number of years, then the result may well be no action of forcible entry can
really prescribe. No matter how long such defendant is in physical possession, the plaintiff may just throw in a demand,
file a suit in court and summarily throw him out of the land.
Florendo v. Foz
Facts: Eustaquio P. Foz executed in Manila a contract, ratified before a notary, obligating himself to deliver his house
and lot for a consideration of P6,000 to Jose Florendo. The latter already paid P2,000 of the purchase prize. In the
contract, plaintiff fixed the period of the payment of the prize wherein plaintiff has to pay the remainder of the prize
when he goes to Vigan or if not to pay to the Church wherein he has a debt and to obtain the title of the subject matter
of the sale. Defendant went to Vigan, plaintiff tendered payment of the remainder of the prize, however, the former
refused, saying that the true prize of the sale recorded in the other instrument was P10,000. As defendant refused
payment, plaintiff filed a suit to comply with the contract of absolute purchase and sale, by delivering to the plaintiff the
property sold.
Issue: WON the plaintiff can compel the defendant to deliver his property pursuant to the notarized contract.
Held: Yes. The contract is valid and effective. From the validity and force of the contract is derived the obligation on
the part of the vendor to deliver the thing sold. Pursuant to the contract, it can’t be found that the payment of the prize
is a precondition for the delivery of the thing. There was no need, therefore, of assent on the part of the plaintiff to pay
the P4,000, the remainder of the price, in order to oblige the defendant unconditionally to deliver the property sold. With
still more reason should the defendant be compelled to effect the material delivery of the property, since, after the
lapse of the period for the delivery of the price, the plaintiff hastened to pay it and, on account of the defendant's refusal
to receive it, duly deposited it, in order to avoid the consequences that might issue from delinquency in the payment of
a sum entrusted to him for a fixed period.
It is the material delivery of the property sold which the defendant must make in compliance with the contract,
inasmuch as the formal delivery de jure was made, according to the provisions of article 1462, 2nd paragraph, of the
same code.
Masallo v. Cesar
Facts:
Plaintiff averring that he is the owner of the tract of land in question brought an action of eviction Lezo against
the defendant recovering possession thereof. Petitioner contended that the defendant by force and intimidation
deprived him of the possession of the land in suit, and has since that time withheld it from him to his damage in the
sum of P25. The defendant answered, denying the averments of the complaint regarding the alleged eviction, and
asserted that the land in question is her property and has been in her possession without interruption for more than
twenty years. It was established that the defendant had been in possession of the land in question for a long period
prior to the occurrence of the incidents out of which this litigation arose.
Issue:
Ruling:
A person who does not have actual possession of real property cannot transfer constructive possession by
the execution and delivery of a public document by which the title to the land is transferred.
Facts:
Petitioner was a government entity created for the purpose to conserve, to provisionally manage and to
dispose assets of government institutions. It had acquired assets consisting of machinery and refrigeration equipment
stored at the Golden City compound which was leased to and in the physical possession of Creative Lines, Inc.,
(Creative Lines). These assets were being sold on an as-is-where-is basis.
Petitioner and respondent entered into an absolute deed of sale over certain machinery and refrigeration
equipment wherein respondent paid the full amount as evidenced by petitioner’s receipt. After two (2) days, respondent
demanded the delivery of the machinery it had purchased. Petitioner issued a Gate Pass to respondent to enable them
to pull out from the compound the properties designated ; however, during the hauling of Lot No. 2 consisting of sixteen
(16) items, only nine (9) items were pulled out by respondent. Respondent filed a complaint for specific performance
and damages against petitioner and Creative Lines. Upon inspection of the remaining items, they found the machinery
and equipment damaged and had missing parts. Petitioner claimed that there was already a constructive delivery of
the machinery and equipment upon the execution of the deed of sale it had complied with its obligation to deliver the
object of the sale since there was no stipulation to the contrary and it was the duty of respondent to take possession of
the property.
The RTC ruled that petitioner is liable for breach of contract and should pay for the actual damages suffered
by respondent. It found that at the time of the sale, petitioner did not have control over the machinery and equipment
and, thus, could not have transferred ownership by constructive delivery. The Court of Appeals affirmed the judgment;
hence, this petition.
Issue:
Whether or not the petitioner had complied with its obligations to make delivery of the properties and failure
to make actual delivery of the properties was not attributable was beyond the control of petitioner?
Held:
No. There was no constructive delivery of the machinery and equipment upon the execution of the deed of
absolute sale or upon the issuance of the gate pass since it was not the petitioner but Creative Lines which had actual
possession of the property. The presumption of constructive delivery is not applicable as it has to yield to the reality
that the purchaser was not placed in possession and control of the property.
Petitioner also claims that its failure to make actual delivery was beyond its control. It posits that the refusal of
Creative Lines to allow the hauling of the machinery and equipment was unforeseen and constituted a fortuitous event.
The matter of fortuitous events is governed by Art. 1174 of the Civil Code which provides that except in cases expressly
specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires
assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though
foreseen, were inevitable. A fortuitous event may either be an act of God, or natural occurrences such as floods or
typhoons, or an act of man such as riots, strikes or wars. However, when the loss is found to be partly the result of a
person’s participation whether by active intervention, neglect or failure to act, the whole occurrence is humanized and
removed from the rules applicable to a fortuitous event. Thus, the risk of loss or deterioration of property is borne by
petitioner. Thus, it should be liable for the damages that may arise from the delay.
Article 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly
be inferred.
With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository
where it is stored or kept. (1463a)
Article 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if
the latter already had it in his possession for any other reason. (1463a)
Article 1513. A person to whom a negotiable document of title has been duly negotiated acquires thereby:
(1) Such title to the goods as the person negotiating the document to him had or had ability to convey to a
purchaser in good faith for value and also such title to the goods as the person to whose order the goods were
to be delivered by the terms of the document had or had ability to convey to a purchaser in good faith for
value; and
(2) The direct obligation of the bailee issuing the document to hold possession of the goods for him according
to the terms of the document as fully as if such bailee had contracted directly with him. (n)
Article 1514. A person to whom a document of title has been transferred, but not negotiated, acquires thereby, as
against the transferor, the title to the goods, subject to the terms of any agreement with the transferor.
If the document is non-negotiable, such person also acquires the right to notify the bailee who issued the document of
the transfer thereof, and thereby to acquire the direct obligation of such bailee to hold possession of the goods for him
according to the terms of the document.
Prior to the notification to such bailee by the transferor or transferee of a non-negotiable document of title, the title of
the transferee to the goods and the right to acquire the obligation of such bailee may be defeated by the levy of an
attachment of execution upon the goods by a creditor of the transferor, or by a notification to such bailee by the
transferor or a subsequent purchaser from the transferor of a subsequent sale of the goods by the transferor. (n)
Facts:
Melencio Malabanan entered into an agreement with the Board of Liquidators for the salvage of surplus properties sunk
in certain waters. They agreed that Malabanan was assigned the right, title and interest in and to all the surplus
properties salvaged, and shall therefore pay the Government for such which shall be made monthly. Subsequently,
Malabanan filed in the CFI a petition for voluntary insolvency which listed the Board and Exequiel Floro as creditors;
as well as several pieces of steel mattings obtained from the waters. The Board claimed that they are the owners of
the steel mattings. Floro opposed this and contended that such steel mattings are owned by Eulalio Legaspi by virtue
of a deed of sale executed in his favor, executed by Floro pursuant to a previous contract between Malabanan and
Floro. The CFI declared Malabanan as the owner of the steel mattings under his contract with the board, thus, Floro
was properly authorized to dispose of the mattings (sale to Legaspi). The Board contends that Malabanan did not
acquire ownership over the steel mattings for failure to comply with certain terms of the contract, allegedly constituting
conditions precedent for the transfer of title.
Issue:
WON , based on the contract between Malabanan and the Board, delivery of the surplus properties salvaged (steel
mattings)were never intended to be delivered to Malabanan.
Held:
There is nothing in the terms of the public instrument in question from which an intent to withhold delivery or transfer of
title may be inferred.
While there can be reservation of title in the seller until full payment of the price (Article 1478, N.C.C.), or, until fulfillment
of a condition (Article 1505, N.C.C.); and while execution of a public instrument amounts to delivery only when from the
deed the contrary does not appear or cannot clearly be inferred (Article 1498, supra), there is nothing in the said contract
which may be deemed a reservation of title, or from which it may clearly be inferred that delivery was not intended.
The contention that there was no delivery is incorrect. While there was no physical tradition, there was one by
agreement (traditio longa manu) in conformity with Article 1499 of the Civil Code.
Abuan v. Garcia
Facts:
Laureano Abuan acquired a homestead which was passed to his heirs (plaintiffs) after his death. Plaintiffs then sold
the parcel of land to Defendants, evidenced by a deed of absolute sale, thus a TCT was issued to defendants on Aug
7, 1953. Plaintiffs then filed an action to recover the land, alleging that the deed of absolute sale had been executed
through fraud, without consideration. But such was settled amicably (that defendants would pay for the land). Claiming
that full payment of the land was made by the defendants only after the agreed time, plaintiffs filed an action for legal
redemption on Mar 4, 1960. Defendants moved to dismiss on the ground that plaintiff’s right of action was already
barred because the 5-year redemption period had already expired. The court sustained the defendant’s motion, thus
dismissed the complaint.
Issue:
When should the 5-year period within which plaintiffs can exercise their right of repurchase begin to run?
Held:
The 5-yr period should begin to run from the date the defendants acquired ownership of the land which was upon the
execution of the deed of sale on Aug 7, 1953. *
But assuming that the deed of absolute sale was null and void, the date of the Agreement can be considered as the
time within which the ownership is vested in the defendants. Such agreement may be a private instrument the execution
of which could not be construed as constructive delivery under Art. 1498 of the New Civil Code. But Art. 1496 explicitly
provides that ownership of the thing sold is acquired by the vendee from the moment it is delivered to him “in any other
manner signifying an agreement that the possession is transferred from the vendor to the vendee.” The intention to
give possession (and ownership) is manifest in the agreement entered into by the parties, specially considering the
following circumstances: (1) the payment of part of the purchase price, there being no stipulation in the agreement that
ownership will not vest in the vendees until full payment of the price; and (2) the fact that the agreement was entered
into in consideration of plaintiffs’ desistance, as in fact they did desist, in prosecuting their reivindicatory action, thereby
leaving the property in the hands of the then and now defendants — as owners thereof, necessarily. This was delivery
brevi manu permissible under Articles 1499 and 1501 of the New Civil Code.
Bautista v. Sioson
Torres, J. / 1919
On September 4, 1912, the defendant Francisco Sioson and his wife Lorenza de la Cruz, through a notarial instrument,
sold to the plaintiff Rosalio Bautista the camarin in question, besides some other property, under the right of repurchase.
It was stipulated that if within two years from the date of the contract the vendors or their successors in interest should
not repurchase said properties for the sum of P400, the price of the sale, such sale should become absolute and
thenceforth the ownership in the properties sold should be consolidated, the execution of another instrument being
unnecessary.
On the same date, September 4, 1912, Rosalio Bautista, through a notarial instrument, leased the properties sold to
him to the vendors Francisco Sioson and Lorenza de la Cruz, for the price of P100 per annum, for the period of two
years counted from the date of the instrument.
August 5, 1914, Francisco Sioson executed before a notary a document by which he sold under right of repurchase to
the defendant Raymundo de la Cruz, the camarin in question. It was stipulated in this instrument that if within six
months, counted from the 1st of August, 1914, the vendor Francisco Sioson should return to the purchase Raymundo
de la Cruz the sum of P422, the price of the purchase, then the purchaser Raymundo de la Cruz would be obliged to
execute in favor of said vendor Francisco Sioson an instrument of resale, but that if within the period mentioned he
should not make the redemption stipulated, said sale should become absolute, the execution of another instrument
being unnecessary.
Plaintiff prayed for the court to hold that his ownership in said buildings was consolidated, to order the defendants to
deliver him the buildings, and to order Francisco Sioson to pay to the him the price of the lease.
Defendants alleged that the camarin described in subparagraph (a) , paragraph 2 of the complaint, was of the exclusive
ownership of the defendant Raymundo de la Cruz.
ISSUE: Which of the two purchasers, the plaintiff Bautista and the defendant Cruz, is the lawful owner of the camarin
successively sold to the former and to the latter by the other defendant Francisco Sioson, its original owner, in
accordance with the provisions contained in article 1473 of the Civil Code which says that:
Should there be no entry; the property shall belong to the person who first took possession of its in good faith
...
The deed of sale between Bautista and Sioson was not entered in the registry of property. Upon the execution
of the second sale of the same camarin by the said Sioson, which sale was made after the death of his wife Lorenza
by virtue of an instrument made in favor of Cruz, it may be presumed, in the absence of proof to the contrary, that the
second purchaser Raymundo de la Cruz acted in good faith. However, actual and material possession of the camarin
by Cruz does not constitute a sufficient legal reason for holding the he has a better right to the building than the first
purchaser Rosalio Bautista, although the latter was not in actual, physical, and material of the camarin that he had
purchased. This conclusion is derived from a strict application of the provisions of said article 1473 of the Civil Code.
To determine who is the lawful owner of the camarin sold, if the provisions of said article of the Code are to
be observed, we have to:
1. determine the contention in regard to which of the two purchasers is in possession
2. If, on the execution of the contract of lease by the first purchaser in favor of the vendor himself, the
constitutum possessorium agreement is to be considered to have been stipulated, the conclusion must
necessarily be reached as to which of the two purchasers first took possession of the camarin sold;
and,
3. whether the material possession of the tenant is of a precarious nature, enjoyed in the same and
representation of the owner Bautista.
A thing sold shall be considered as delivered, when it is placed in the hands and possession of the vendee.
When the sale should be made by means of a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if in said instrument the contrary does not appear
or may be clearly inferred.
In the contract of lease, it showed that the camarin would be continued to be occupied by its previous owner and vendor
after it had been delivered, symbolically, by means of the instrument executed for the purpose in favor of the purchaser,
in order that he might hold it in the capacity of lessee, it being supposed, by a legal fiction, that the purchaser entered
into possession of the camarin sold, a form of possession utilized by the purchaser by virtue of the clause known in law
as constitutum possessorium, stipulated between the contracting parties.
Rosalio Bautista was the first possessor of the camarin by virtue of the sale between him and Sioson. He entered into
the material possession under title of owner, of the camarin sold to him by Francisco Sioson, and, by virtue of another
instrument of lease, of the same date, the purchaser and owner of the camarin conveyed and delivered this building to
the lessee in view of said contract.
Material possession being enjoyed by Cruz was subsequent by almost two years. It was an unlawful possession which
was transmitted to him by Francisco Sioson, who held the camarin precariously and in the capacity of tenant. Sioson
was without any right whatever to convey to Raymundo de la Cruz the possession under title of owner referred to in
article 1473, aforementioned of the Civil Code.
Article 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases provided for in article 1503, first,
second and third paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer
as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller
omit so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to
the carrier as a delivery to himself, or may hold the seller responsible in damages.
Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances in which the seller
knows or ought to know that it is usual to insure, the seller must give such notice to the buyer as may enable him to
insure them during their transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during
such transit. (n)
“FOB Sales”
Facts:
A sale of 80 drums of caustic soda was agreed between Behn, Meyer & Co. and Teodoro Yanco. The merchandise
was shipped from New York to Manila.
However, the ship carrying the cargo was detained at Penang and the 71 of the 80 drums were removed. Respondent
Yangco also refused to accept the 9 remaining and also refused to accept the offer of Behn Meyer to have the products
substituted with other merchandise, which however were different from what was ordered.
It must be noted that the contract provided for "c.i.f. Manila, pagadero against delivery of documents."
Yanco filed an action seeking for damages for alleged breach of contract.
Issue: WON Behn, Meyer & Co. should bear the burden of the loss of the merchandise? YES
Held:
Rule as to delivery of goods by a vendor via a common carrier (If contract is silent – delivery of seller to common carrier
transfer ownership to buyer)
Determination of the place of delivery always resolves itself into a question of act. If the contract be silent as to the
person or mode by which the goods are to be sent, delivery by the vendor to a common carrier, in the usual and ordinary
course of business, transfers the property to the vendee.
A specification in a contact relative to the payment of freight can be taken to indicate the intention of the parties in
regard to the place of delivery. If the buyer is to pay the freight, it is reasonable to suppose that he does so because
the goods become his at the point of shipment.
Payment of freight by the seller = title of property does not pass until the goods have reached their destination
On the other hand, if the seller is to pay the freight, the inference is equally so strong that the duty of the seller is to
have the goods transported to their ultimate destination and that title to property does not pass until the goods have
reached their destination.
c.i.f. means Cost, Insurance and Freight = CFI is paid by the seller
The letters "c.i.f." found in British contracts stand for cost, insurance, and freight. They signify that the price fixed covers
not only the cost of the goods, but the expense of freight and insurance to be paid by the seller.
F.O.B. stands for Free on Board = seller bear all expenses until goods are delivered
In this case, in addition to the letters "c.i.f.," has the word following, "Manila." In mercantile contracts of American origin
the letters "F.O.B." standing for the words "Free on Board," are frequently used. The meaning is that the seller shall
bear all expenses until the goods are delivered where they are to be "F.O.B."
According as to whether the goods are to be delivered "F.O.B." at the point of shipment or at the point of destination
determines the time when property passes. However, both the terms "c.i.f." and "F.O.B." merely make rules of
presumption which yield to proof of contrary intention.
Hence, we believe that the word Manila in conjunction with the letters "c.i.f." must mean that the contract price, covering
costs, insurance, and freight, signifies that delivery was to made at Manila. If petitioner Behn Meyer has seriously
thought that the place of delivery was New York and Not Manila, it would not have gone to the trouble of making fruitless
attempts to substitute goods for the merchandise named in the contract, but would have permitted the entire loss of the
shipment to fall upon the defendant.
Behn Meyer failed to prove that it performed its part in the contract
In this case, the place of delivery was Manila and plaintiff (Behn Meyer) has not legally excused default in delivery of
the specified merchandise at that place. In resume, we find that the plaintiff has not proved the performance on its part
of the conditions precedent in the contract.
For breach of warranty, the buyer (Yanco) may demand rescission of the contract of sale
The warranty — the material promise — of the seller to the buyer has not been complied with. The buyer may therefore
rescind the contract of sale because of a breach in substantial particulars going to the essence of the contract. As
contemplated by article 1451 of the Civil Code, the vendee can demand fulfillment of the contract, and this being shown
to be impossible, is relieved of his obligation. There thus being sufficient ground for rescission, the defendant is not
liable.
“CIF Sales”
FACTS:
• General Foods is a foreign corporation licensed to do business in the Philippines.
• National Coconut Corporation (NACOCO) sold to General Foods 1500 tons of long copra under the terms:
a. Quantity: Seller could deliver 5% more or less than the contracted quantity, and the surplus/deficiency
shall be paid on the basis of the delivered weight.
b. Price: CIF New York.
c. Payment: Buyers to open an Irrevocable Letter of Credit for 95% of invoice value based on shipping weight.
d. Balance of the price was to be ascertained on the basis of outturn weights and quality of the cargo at the
port of discharge.
e. Weights: Net landed weights.
• In the Philippines, the net cargo was weighed at 1054 tons, the alleged weight delivered by NACOCO. NACOCO then
withdrew 95% (or $136,000) of the amount in the Letter of Credit in favor of NACOCO.
• In New York, the net cargo was reweighed and found to weigh only 898 short tons. General Foods demanded the
refund of the amount of $24000.
• NACOCO’s officer’s-in-charge acknowledged in a letter liability the deficiency and promised payment as soon as
funds were available.
• However, NACOCO was abolished and went into liquidation. The Board of Liquidators refused to pay the claim of
General Foods.
• General Foods then filed to recover $24,000 and 17% exchange tax plus attorney’s fees and costs.
• General Foods alleges that although the sale quoted CIF New York, the agreement contemplated the payment of the
price according to the weight and quality of the cargo upon arrival in New York (port of destination). Therefore, the risk
of shipment was upon the seller.
• NACOCO alleges that the contract is an ordinary CIF, which means that delivery to the carrier is delivery to the buyer.
Therefore, the shipment having been delivered to the buyer and the buyer having paid the price, the sale was
consummated.
ISSUES:
1. Whether the weight in New York should be the basis upon payment of the price of copra should be made. – Yes.
The weight in New York should be the basis.
2. Whether what is to be ascertained based upon the outturn weights and quality at port of discharge was only the
balance due to be paid. – No. The balance due to be paid is not the only basis.
HELD:
• Under an ordinary CIF agreement, delivery to the buyer is complete upon delivery of the goods to the carrier and
tender of the shipping and other documents required by the contract and the insurance policy are taken in the buyer’s
behalf. However, the parties may, by express stipulation, modify a CIF contract and throw the risk upon the seller until
the arrival in the port of destinations.
• In this case, the terms of the contract indicate and intention that the precise amount to be paid by the buyer depended
upon the ascertainment of the exact net weight of the cargo at the point of destination:
a. Net landed weights were to govern.
b. The balance of the price was to be ascertained on
the basis of outturn weights and quality of the
cargo at the port of discharge.
c. The seller could deliver 5% more or less than the contracted quantity, and the surplus/deficiency shall be paid
on the basis of the delivered weight.
• While the risk of loss was placed on General Foods after the delivery of the cargo to the carrier, it was agreed that
the payment of the price was to be according to the “net landed weight” which is 898 (weighed in New York) and not
1054 (weighed in the Philippines).
• NACOCO had the burden to prove that the shortage was due to risks of voyage and not the natural drying up of copra.
In other words, if the weight deficiency was due to the risks of the voyage, General Food would not have been entitled
to any claim in the deficiency.
• The provision on the “balance of the price was to be ascertained on the basis of outturn weights and quality of the
cargo at the port of discharge” should not be construed separately from the provision that the “net landed weight” was
to control.
• The manifest intention of the parties was for the total price to be finally ascertained only upon determining the net
weight and quality of the goods upon arrival in New York, because the nature of copra is that it dries up and diminishes
weight during the voyage.
• In fact, this intention was shown by the letter of the officer-in-charge of NACOCO acknowledging NACOCO’s liability
to General Foods. Though this letter of acknowledgement should not be construed as an admission of liability of
NACOCO, it is nevertheless competent evidence of NACOCO’s intention to be bound by the net landed weight or
outturn weight of the copra at the port of discharge.
“FAS”
Article 1503. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve
the right of possession or ownership in the goods until certain conditions have been fulfilled. The right of possession or
ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee
for the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order
of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except for the form of the bill
of lading, the ownership would have passed to the buyer on shipment of the goods, the seller's property in the goods
shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or of his agent, but
possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the possession
of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading together
to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if
he does not honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added right thereby.
If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is
indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value, the bill
of lading, or goods from the buyer will obtain the ownership in the goods, although the bill of exchange has not been
honored, provided that such purchaser has received delivery of the bill of lading indorsed by the consignee named
therein, or of the goods, without notice of the facts making the transfer wrongful. (n)
Double Sales
Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded
it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. (1473)
Carbonell v. CA
FACTS: Poncio, a Batanes native, owned a parcel of land, which he offered to sell to Carbonell and Infante. The land
was mortgaged to Republic Bank. Poncio and Carbonell agreed to the sale of the land, and the latter assumed to pay
the mortgage in favor of the bank. Poncio and Carbonell executed an instrument where the latter allowed the former to
remain in the premises in spite of the sale for a period of 1 year. Later on, when the Formal Deed of Sale was to be
executed, Poncio told Carbonell that he could no longer proceed with the sale as he had already sold the same to
Infante for a better price. Carbonell immediately sought to register adverse claim; 4 days later, Infante registered the
sale with the adverse claim annotated thereto. Infante thereafter introduced significant improvements on the property.
They now dispute ownership over the said land.
HELD: CARBONELL. In order to claim the benefit of Art. 1544, the buyer of realty must register the property in good
faith. It is a pre-condition to a superior title. In this case, Infante was not in good faith, thus the prior sale to Carbonell
must prevail. Infante registered her claim 4 days after the adverse claim was registered, she had notice that Carbonell
paid off the mortgage debt as the mortgage passbook was already in his possession. She likewise ignored Carbonell
and refused to talk to here. These are badges of bad faith that taint her registration.
Cheng v. Genato
FACTS: Genato owned 2 parcels of land in Paradise Farms. He agreed with the Da Jose spouses to enter into a
contract to sell over the said parcels; it was embodied in a public instrument annotated to the certificates of title. They
asked for and were granted an extension for the payment of the purchase price. Unknown to them, Genato dealt with
Cheng regarding the lot, executed an Affidavit to annul the Contract to Sell, appraised the latter of his decision to
rescind the sale, and received a down payment from Cheng upon the guarantee that the said contract to sell will be
annulled. By chance, Genato and the spouses met at the RD, where he again agreed to continue the contract with
them. He advised Cheng of his decision; the latter countered that the sale had already been perfected. Cheng executed
an Affidavit of Adverse Claim and had it annotated to the TCTs and sued for specific performance.
ISSUE: Who has a better title, Cheng or the Da Jose spouses?
HELD: DA JOSE SPOUSES. Both agreements involve a contract to sell, which makes Art. 1544 inapplicable since
neither a transfer of ownership nor a sales transaction took place. A contract to sell is premised upon a suspensive
condition—the full payment of the purchase price. That being the case, the elementary principle of first in time, priority
in right should apply. As such, the contract in favor of the Da Jose spouses must prevail considering that the same had
not been validly rescinded. Besides, Cheng cannot be considered to have acted in good faith as he had knowledge of
the prior transaction in favor of the spouses.
Facts: On 29 March 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a 19-hectare parcel of
land in Las Piñas, Rizal, covered by TCT 287416. The owner’s duplicate copy of the title was turned over to Gundran.
However, he did not register the Deed of Absolute Sale because he said he was advised in the Office of the Register
of Deeds of Pasig of the existence of notices of lis pendens on the title. On 20 November 1972, Gundran and Agricultural
and Home Development Group (AHDG) entered into a Joint Venture Agreement for the improvement and subdivision
of the land. This agreement was also not annotated on the title. On 30 August 1976, the spouses Andres Diaz and
Josefa Mia again entered into another contract of sale of the same property with Librado Cabautan. On 3 September
1976, by virtue of an order of the CFI Rizal, a new owner’s copy of the certificate of title was issued to the Diaz spouses,
who had alleged the loss of their copy. On that same date, the notices of lis pendens annotated on TCT 287416 were
canceled and the Deed of Sale in favor of Cabautan was recorded. A new TCT S-33850/T-172 was thereupon issued
in his name in lieu of the canceled TCT 287416.
On 14 March 1977, Gundran instituted an action for reconveyance before the CFI Pasay City * against Librado
Cabautan and Josefa Mia seeking, among others, the cancellation of TCT 33850/T-172 and the issuance of a new
certificate of title in his name. On 31 August 1977, AHDG, represented by Nicasio D. Sanchez, Sr. (later substituted by
Milagros S. Bucu), filed a complaint in intervention with substantially the same allegations and prayers as that in
Gundran’s complaint. In a decision dated 12 January 1987, Gundran’s complaint and petitioner’s complaint in
intervention were dismissed for lack of merit. So was Cabautan’s counterclaims, for insufficiency of evidence.
Upon appeal, this decision was affirmed by the Court of Appeals, with the modification that Josefa Mia was ordered to
pay Gundran the sum of P90,000.00, with legal interest from 3 September 1976, plus the costs of suit.
The Supreme Court denied the petition and affirmed in toto the questioned decision; with costs against AHDG.
1. Article 1544
Under Article 1544 of the Civil Code of the Philippines, it is provided that “If the same thing should have been sold to
different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in
good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership
shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
The first sale to Gundran was not registered while the second sale to Cabautan was registered. Preferential rights are
accorded to Cabautan, who had registered the sale in his favor, as against AHDG’s coventurer whose right to the same
property had not been recorded.
A purchaser in good faith is defined as “one who buys the property of another without notice that some other person
has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim or interest of some other person in the property.” In the present case, an examination
of TCT 287416 discloses no annotation of any sale, lien, encumbrance or adverse claim in favor of Gundran or AHDC.
4. Registered property under Torrens system; Person charge with notice of burdens noted on the register of title
When the property sold is registered under the Torrens system, registration is the operative act to convey or affect the
land insofar as third persons are concerned. Thus, a person dealing with registered land is only charged with notice of
the burdens on the property which are noted on the register or certificate of title.
5. Notices of lis pendes not a lien or encumbrance, merely notice of litigation of property subject to the result of
the suit
Notices of lis pendens in favor of other persons were earlier inscribed on the title did not have the effect of establishing
a lien or encumbrance on the property affected. Their only purpose was to give notice to third persons and to the whole
world that any interest they might acquire in the property pending litigation would be subject to the result of the suit.
Cabautan took the risk of acquiring the property even in the light of notice of lis pendens inscribed in the title.
Significantly, three days after the execution of the deed of sale in his favor, the notices of lis pendens were canceled
by virtue of the orders of the CFI Rizal, Branch 23, dated 1 and 4 April 1974. Cabautan therefore acquired the land free
of any liens or encumbrances and so could claim to be a purchaser in good faith and for value.
AHDG insists that it was already in possession of the disputed property when Cabautan purchased it and that he could
not have not known of that possession. Such knowledge should belie his claim that he was an innocent purchaser for
value. However, the courts below found no evidence of the alleged possession, which the Supreme Court must also
reject in deference to this factual finding.
The issue in the present case is whether Cabautan is an innocent purchaser for value and so entitled to the priority
granted under Article 1544 of the Civil Code. The Casis case, on the other hand, involved the issues of whether or not:
1) certiorari was the proper remedy of the petitioner: 2) the previous petition for certiorari which originated from the
quieting of title case was similar to and, hence, a bar to the petition for certiorari arising from the forcible entry case;
and 3) the court a quo committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the
order which dissolved the restraining order issued in connection with the ejectment case. The Court was not called
upon in that case to determine who as between the two purchasers of the subject property should be preferred.
9. Excerpt used by AHDG a narration of background facts and not adopted as a doctrine by the
Supreme Court
AHDG invokes the ruling of the lower court in that case to the effect that the registration of the sale in favor of the
second purchaser and the issuance of a new certificate of title in his favor did not in any manner vest in him any right
of possession and ownership over the subject property because the seller, by reason of their prior sale, had already
lost whatever right or interest she might have had in the property at the time the second sale was made. The excerpt
was included in the ponencia only as part of the narration of the background facts and was not thereby adopted as a
doctrine of the Court. It was considered only for the purpose of ascertaining if the court below had determined the issue
of the possession of the subject property pending resolution of the question of ownership. Obviously, the Court could
not have adopted that questionable ruling as it would clearly militate against the provision of Article 1544.
10. No one can sell what he does not own; Article 1544 either an exception to the general rule or a reiteration of
the general rule insofar as innocent third parties are concerned
Justice Edgardo L. Paras observed that “No one can sell what he does not own, but this is merely the general rule. Is
Art. 1544 then an exception to the general rule? In a sense, yes, by reason of public convenience (See Aitken v. Lao,
36 Phil. 510); in still another sense, it really reiterates the general rule in that insofar as innocent third persons are
concerned, the registered owner (in the case of real property) is still the owner, with power of disposition.
11. Language of Article 1544 clear; Cabautan deemed owner
The language of Article 1544 is clear and unequivocal. In light of its mandate and of the facts established in the present
case, Ownership must be recognized in the private respondent, who bought the property in good faith and, as an
innocent purchaser for value, duly and promptly registered the sale in his favor.